2024 universal registration document

Active involvement of suppliers:

L'Oréal assesses its palm oil suppliers using the Sustainable Palm Index (SPI) – a measurement tool developed as part of the Group's work with the ASD. It is used to assess each supplier's progress and compliance with Group requirements. It covers traceability, certification, Human Rights, deforestation and sector-based engagement. The SPI score is incorporated into annual supplier assessments.

Support for independent smallholders:

L'Oréal is committed to supporting independent smallhold farmers connected to its value chain. For example, it is involved in five field projects run by NGOs in Indonesia and Malaysia. These projects are designed to support small-scale growers in adopting better farming practices, in particular the principles of regenerative agriculture, in order to improve their financial resilience, while reducing their negative environmental impact.

Contributing to the transformation of the sector:

L'Oréal participates in several sector coalitions, driven by its firm belief that collaborative action yields results. In line with this approach, in 2019, L'Oréal cofounded the ASD to collectively address the specific complexity of the palm oil derivatives market. Comprising 36 members, the ASD is committed to value chain transparency, risk analysis, supplier engagement and sector transformation.

For streams of renewable raw materials not part of the palm oil chain, which represent 21% of the portfolio of renewable raw materials in volume and 71% in number. L’Oréal has defined sustainable sourcing criteria to assess the sustainability of renewable raw material streams. These indicators were defined using environmental, social and economic indicators from external databases⁽¹⁾.

These indicators are consolidated within the SCAN (Sustainable Characterisation) Index, allowing the Group to prioritise the implementation of its sustainable sourcing action plans. The Group updates the information collected regularly.

L'Oréal’s aim is for all of the Group's supplies of renewable raw materials to derive from sustainable sources.

To achieve this, L’Oréal launched a support and training programme for more than 200 suppliers on the issues of sustainable sourcing of raw materials in order to guarantee the traceability of the raw materials delivered to L’Oréal and ensure the associated streams are secure. Depending on the level of environmental and/or social risk identified on these streams, suppliers are asked to apply the field audit procedure for producers (88 indicators). This procedure was developed by L’Oréal with the support of the Rainforest Alliance NGO and reviewed in 2019 by EcoCert, the Biodiversity Consultancy and the Danish Institute for Human Rights. Suppliers are also encouraged to demonstrate their sustainability practices via sustainable sourcing certifications (Fair for Life, SAN/ Rainforest Alliance segregated model). With regard to biodiversity, of the 389 plant species that are the source of the renewable raw materials used by the Group, around 4% present significant challenges (endangered species, impact of production on natural environments) depending on their geographic origin and the method of extraction or production used. They are the subject of specific action plans set up with Suppliers and, if necessary, systematic support from independent external third parties to help manage the real impacts on the areas from which these ingredients are sourced.

Regarding plastics, L’Oréal has taken, and is continuing to take, action in the following domains to reduce its overall plastic footprint: (1) packaging, (2) microplastics in the formulas of its products, (3) point-of-sale furniture, (4) transport and (5) plastic waste generated by its factories and warehouses. As part of the L'Oréal for the Future programme, the Group is seeking to use recycled or biobased plastic for its packaging and to increase the use of refillable, reusable, recyclable and/or compostable packaging. Similarly, L'Oréal has set itself the objective of eco-designing its advertising displays, in line with the Group's sustainability principles.

In addition to ecodesign measures carried out by research laboratories, Operations teams and brands, this commitment requires the involvement of a range of stakeholders (companies located at different levels of the value chain, research institutions and public authorities).

In order to reduce the footprint of its packaging, particularly in terms of plastic, L’Oréal has adopted a strategy known as the "3Rs":

• Reduce the intensity (weight and size of packaging) of the packaging used for its products, including plastic packaging;
• Replace fossil-based plastics with other materials that have less of an impact on the environment; and
• Recycle by designing recyclable packaging and increasing the use of recycled plastic.

To do this, L’Oréal takes action at the design level of its products and develops circular economy measures that respect the environment and social rights.

Its approach to reducing the plastic content in packaging is based on the following pillars:

1. Reducing the intensity of packaging used by the Group, particularly plastic packaging;
2. Replacing fossil-based plastics with other materials that have less of an impact on the environment, such as composite packaging or by developing shampoo bars; and
3. Promoting reuse (solutions must be analysed with regard to their overall environmental impact and the packaging life cycle as a whole and must be compatible with health protection and the proper conservation of products).

In addition to reducing its use of plastics, L’Oréal intends to reduce the environmental impact of the remaining plastics it uses by means of recycling. Recycling helps to reduce carbon emissions associated with the production of virgin plastic and to improve waste management by preventing litter, as plastics are collected and sorted for recycling. To this end, L’Oréal promotes the implementation of Extended Producer Responsibility (EPR) initiatives in countries in which this sector is underdeveloped.